Top tips on creating a shareholders’ agreement, and earning more than £1k pa on a side hustle? You’d better read on!
Today we’re providing you with some top tips on how to draw up a shareholders’ agreement to prevent issues further down the line, and if you’re earning more than £1,000 per year through your side hustle, you may need to complete an annual self-assessment.
Getting a shareholders’ agreement right
A shareholder’s agreement can be one of the most valuable documents a business ever puts in place. It allows a company’s owners to set out, in detail, how they will work together, make decisions, deal with disputes and manage future changes in ownership.
When a business starts, everyone is positive and shares the same objectives. However, circumstances can change. Shareholders may wish to leave, new investors may join, disagreements could arise, or succession plans may need to be implemented. A well-drafted shareholders’ agreement helps provide certainty and can significantly reduce the risk of costly disputes.
In this article we set out some of the key areas to consider when putting together a shareholders’ agreement.
What exactly is a shareholders’ agreement?
A shareholders’ agreement is essentially a contract between the shareholders of a company. It provides shareholders with an opportunity to establish clear expectations from the outset and create mechanisms that help to deal with future problems.
By preparing an agreement before problems arise, it is easier to discuss matters objectively.
Ownership and shareholdings
The agreement should clearly set out who owns the company and the rights attached to different shares. Where shareholders contribute different levels of capital, expertise or time, they may expect different rights and rewards. This needs to be clearly recorded up front.
Decision-making
Not all business decisions have the same level of importance. Shareholders should consider which decisions can be made by directors and which should require shareholder approval.
Clear decision-making procedures help avoid uncertainty and ensure that certain actions cannot be taken without appropriate consent.
Share transfers
It is often a good idea to control who can acquire an interest in the business. Without suitable provisions, shares could potentially be transferred to individuals whom the remaining shareholders would not choose as business partners.
Succession and exit planning
Few shareholders expect ownership to remain unchanged indefinitely. Retirement, ill health, death or a desire to pursue other opportunities can all lead to someone exiting a business.
Planning for these events in advance can make ownership transitions smoother and reduce uncertainty for both the business and the departing shareholder’s family or estate.
Resolving disputes
Even where shareholders have a strong relationship, disagreements can sometimes arise. Including mechanisms for resolving disputes helps to provide a structured way forward and reduce the risk of a lengthy conflict that could derail the business.
Protecting the business
If a shareholder leaves the business, there may be concerns about how they might use confidential information. Appropriate protections can allow everyone to feel comfortable and safeguard the value of the company.
Funding the business
As businesses grow, they may require additional investment. Shareholders should consider whether they are willing or able to provide further funding and what happens if some shareholders contribute while others do not.
Tax considerations
The way ownership is structured can have significant tax consequences, particularly where succession planning or a future sale of the business is anticipated.
Considering tax implications at an early stage may help shareholders achieve their commercial objectives in a more tax-efficient manner.
Conclusion
A shareholder’s agreement is more than a legal document. It is an opportunity for shareholders to discuss ownership, decision-making, succession and future ambitions before any of these become an issue. Taking time to address these matters at an early stage can help protect both the business and the owners for years to come.
Please talk to us if you need help in planning for an agreement. We can help with share and company valuations and in putting the shareholders wishes into an agreement with a local solicitor.
Do you need to pay tax on your side hustle?
Those who have turned their hobby into a side hustle are being reminded by HMRC that their income from these activities may be taxable.
With wedding season in full swing, some may be making some extra income from selling wedding stationery, filming a first dance or cake-making.
Tax rules mean that if you earn more than £1,000 from your side hustle in a tax year, you may need to complete a Self Assessment tax return and pay tax.
The £1,000 threshold is a combined total. A person that has multiple sources of side hustle income would need to add the earnings of each source of income together before determining whether their earnings exceeded the threshold.
Selling unwanted items is unlikely to need reporting to HMRC, however selling goods for a profit, or providing a service for payment is likely to be considered trading and may need to be declared.
If you’d like help to know whether you need to pay tax on your side hustle, please get in touch. We’d be happy to help you.
Update on government’s Small Business Plan
The government has published a one-year-on update to its Small Business Plan, which is intended to support small and medium-sized business to start, scale and grow.
Key highlights from the report include:
Late payment
The Small Business Protections Bill was laid before Parliament in May 2026. The new legislation includes stricter maximum payment terms, mandatory interest upon late payments, increased board-level scrutiny of large company payment practices, and stronger powers for the Small Business Commissioner.
The report reveals that the Small Business Commissioner recovered £1.5m in late payments for small businesses, a significant increase on previous years.
Tax administration
Various reforms were introduced as part of Tax Update 2026 which are expected to reduce administrative burdens on business. The government also cites Making Tax Digital (MTD) as a time-saver, and notes that all VAT invoices will have to electronically by April 2029.
Whether businesses see these changes as easing their administrative burden may be another story.
Access to finance
The British Bank’s financial capacity was increased to £25.6 billion at Spending Review 2025, allowing it to boost access to finance for SMEs.
The Growth Guarantee Scheme is also being expanded so that by 2028-29, total SME lending supported through the scheme will increase to £3.35 billion per year.
The Start Up Loans Programme is being expanded to deliver at least 85,000 loans over the next five years and broaden eligibility so that businesses trading for up to five years are included. This will be a considerable step up from existing lending. Between August 2025 and May 2026, the programme has made 9,551 loans.
Apprenticeships
The apprenticeship system is being simplified to make it simpler and easier for small businesses in England to take on apprentices. UK businesses can now access the new Youth Jobs Grant that pays £3,000 for every eligible young person they hire.
To review the report in full, see: https://assets.publishing.service.gov.uk/media/6a564b609e63154454413662/backing-your-business-small-business-plan-one-year-on.pdf
If you would like help with your business processes or support with tax or accessing finance, please give us a call. We’re here to help you!